Directors get £100,000 for 75 days

Survey fuels boardroom pay controversy by revealing lucrative non-executive posts with top firms
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Indy Politics
Controversy over boardroom pay was set to intensify yesterday as it emerged that non- executive directors at Britain's biggest businesses earn nearly £100,000 from an average of five companies.

For that, they will typically be contracted to work as advisers for 75 days a year - 15 at each organisation. In addition, 56 per cent of the overwhelmingly male non-executive directors also hold a full-time post on the board of another company, according to the pay consultants Sedgwick Noble Lowndes.

Non-executive directors sit on "remuneration committees" which dictate the pay of senior executives. Their involvement in drawing up earning packages for boardroom colleagues gives rise to the allegation that the system is a money-making merry-go-round involving the same group of high- earning businessmen who have a vested interest in voting for big pay rises.

Business leaders say shareholders can veto high salaries, but critics argue that most large companies are owned by City institutions whose senior managers already have part-time jobs on company boards.

In a survey of more than 300 senior managers at 100 companies, Sedgwick also found that non-executive chairmen earn £33,750 for 30 days' contracted work, with the average figure rising to £57,000 at businesses with sales of more than £600m. Some 52 per cent hold a full-time position on the board of another company.

Non-executive directors at firms of all sizes earn an average £14,400 for 15 days' work and £18,750 at big companies.

The study showed that only one in 22 boardroom advisers was female. Andy Christie, a director of Sedgwick, said the predominance of men was not unexpected because women were rarely appointed to executive directorships.

"Until women can gain similar levels of board experience to their male colleagues, they are unlikely to move their way very rapidly into the non-executive ranks," said Mr Christie.

Non-executive directors have an average of 18 years' experience of serving on management boards and five of these include years spent with the director's current employer.

For chairmen, the figures are higher - an average of 21 years' board experience including seven with their current employer. Nearly 40 per cent of non- executive directors are over 60; in the case of chairmen, the proportion is over 60 per cent.

About one-third of contracts for boardroom advisers are fixed-term and three-quarters last three years. Only 8 per cent of non-executive directors are on rolling contracts with most lasting 12 months. Mr Christie said: "On the whole, the fees earned by non-executive directors are roughly equivalent to the going rate for management consultancy services, although they can earn significantly more in large corporations."